ISLAMABAD: The government has reportedly decided to conduct financial study on pensions, its overall financial impact to reform it and for reconsideration of retirement age, well-informed sources told Business Recorder.
The decision was taken by the Economic Coordination Committee (ECC) of the Cabinet on June 22, 2022 on a summary of Ministry of Railways. Sharing the details, sources said, Ministry of Railways informed the forum that the Federal Government had sanctioned a Grant of Rs. 42.00 billion for CFY 2021-22 to Pakistan Railways (PR), against the actual Grant of Rs. 47.50 billion for FY 2020-21, out of total budget outlay of Rs. 99.974 billion for CFY 2021-22.
It was added that Pakistan Railways had a work force of 64,126 employees and 124,881 pensioners and thereby it was spending more than Rs. 70 billion on their pay and pension which was more than two thirds of its annual budget. The revenues of Pakistan Railways peaked at Rs. 54.514 billion in 2018-19. However, due to the Covid-19 pandemic, the revenues decreased to Rs. 48.652 billion in FY 2020-21.
In the current financial year, the revenues were projected at Rs. 58.000 billion, of which Rs. 53.349 billion had been collected till May 31, 2022. The ECC was informed that Pakistan Railways was an attached department of Federal Government, under Railways Division, and thereby policy decisions relating to pay and pension also applied to it and the latter introduced liberalized pension.
The ECC was further informed that Pakistan Railways was an attached rules and restoration of commuted portion of pension added to its financial burden. The budgetary and post budgetary increases in salary and pension worked out to be Rs. 6.131 billion.
During CFY, increase in fuel prices and electricity tariffs further caused financial impact amounting to Rs, 5.0 billion and Rs. 2.4 billion respectively. The payments of commutation, encashment and pension arrears were also pending due to shortage of funds. Similarly, the PM Assistance Package liabilities were held-up for over seven years.
The cumulative liability of the aforementioned heads was estimated at Rs. 12.682 billion (Rs. 5.458 billion and Rs. 7.224 billion). The Benevolent Fund Grants of Rs. 2.922 billion were also pending. PR was now facing contempt of court at two High Courts and more than 125 cases of non-compliance at Wafaqi Mohtasib, for non-payments.
Furthermore, an amount of Rs. 3.634 billion, as due to contractors, was also outstanding apart from Rs. 0.376 billion payables to FBR. Thus, the total impact of all these factors was Rs. 33.146 billion. Finance Division had provisionally allocated additional Rs.5.00 billion on 2 June, 2022, while issuing revised indicative budget ceiling.
During the ensuing discussion, the ECC observed that there was a need for a developing strategic road map for Pakistan Railways. The Secretary Railways noted that a strategic plan was already under preparation.
However, exponential increase in pension after the Pension Policy 2015 had consumed major portion of the allocated budget. The forum observed that pension was a huge liability and there was a need to conduct a financial study on its overall impact and emphasized the need for pension reforms including re- consideration of retiring age.
After detailed discussion, the ECC approved provision of supplementary grant/Additional Grant-in-Aid of Rs.15.000 billion including the Rs5.00 billion already provisionally allocated to Pakistan Railways to settle a major portion of its pending liability in last quarter of the current financial year.
The Federal Cabinet in its meeting held on June 28, 2022 has also ratified the decision of the ECC.
Copyright Business Recorder, 2022